History
Lesson – 7.2.b.1
Paper-7: History Of USA (1776-1945 AD)
Topic- 2.b: Economic change: Growth of Capitalism & Big Business
Lecture: 1
- Introduction
Nineteenth century the post reconstruction era in America witnessed several changes on miscellaneous front. However, the change that left a permanent imprint on the American life was the loss of the frontier.
F. J. Turner in the latter half of the nineteenth century declared that the ‘frontier had ceased to exist’.
Professor Palit has pointed out that the loss of frontier instilled within the minds of the Americans a fear of loss of their economic robustness, the characteristic definition of their identity.
After 1890 the last frontier was gone. United States spanned from the east coast of the Atlantic to the west coast of the Pacific. There was no more new lands for further expansion of agriculture. Naturally, United States turned inwards for industrial growth. Now they had to multiply goods through industrialization to keep up the standard of living. This was one realization.
There was another realization that there was enough rural surpluseshave been generated since the civil war, and this rural surplus of capital could be pumped into industrial growth. These two were the key factors for the coming industrial revolution.
'The Industrial Revolution' at its simplest refers to a mainly agrarian world economy based on manual labour was transformed into one of industry and manufacturing by machines.
'The Industrial Revolution' also refers to a period of massive economic, technological, social and cultural change.
The precise dates are a subject for debate and vary by historian, but the 1760/80s to the 1830/40s are most common, with the developments beginning in Britain and then spreading to the rest of the world, including the United States.
2. Industrial Revolution
Economists believe that industrialization in any country requires presence of certain factors of production. They identify these factors of production as land, labor, capital, and business organization.
American economy in the nineteenth century possessed all these factors needed to industrialize. The foremost factor that supported coming of the industrial revolution was land.
Land
Ample availability of land in America was one factor that boosted industrial revolution and sustained it.
Explicating the vitality of land as a factor Professor Palit has pointed out...
United States was particularly a very good cradle for an industrial revolution, much better than a genuine industrial revolution in U.K. This was the land of plenty.
If we consider land as the first factor, we see United States had plenty of lands; more lands, less people
These lands became the laboratory of new inventions both in matters of agriculture and industry.
Labour
Labor potentiality of America was thriving during the latter half of the nineteenth century. People flocked to this new land in search of work, food and security.
Immigration became a potential factor to reckon with for the American census. In fact it became a well-conceived and followed national policy as pointed by Professor Palit...
United States had deliberately allowed migration of labor from the old world to the new world. We know that not only the early settlers, the pioneer farmers who had founded the United States, in successive batches, people from the old world, the continent, had come to the United States. Waves of people had come, particularly the underdogs of Europe had come from the east European countries, from Russia, from Italy, from France. All these countries had provided cheap labor; all of them had come from these states. So, labor was available in plenty. On top of that, the slaves of the south had been emancipated by the proclamation of Abraham Lincoln in 1863. So they also became free labor, added to the force of the north.
3. Growth of Capitalism
Next, we come to the rise of capitalism. Now we find that because the land resources were plenty there was quick money available. These countries, these states of United Sates had lot of reserve of basic things of industry likecoal, iron, and then oil finally it will be electricity.
Now coal reserve was plenty in the United States, so much so that the entire plain of Illinois and further you can imagine. Coal available to other areas like Oklahoma, Texas, these places also had coal, and we looked to further north, just below the Great Lakes, there was a rough land where new states would be born, later on in the 1870s, like Dakota, Wyoming, and Idaho they also had vast coal under the soil. But the chief coal bearing state would be Illinois. So coal reserves were there so easy money was coming by the sale of coal.
If we talk about iron the main area would be once again down the lakes, the Great Lakes of the north to Illinois; the belt had enough of iron deposit as well.The famous Mesabi iron mine that was a part of this Illinois, particularly between, it was very close to Chicago, on the banks of Lake Michigan, plenty of iron ore were available.
Oil
If we talk about oil, oil as you know was first drilled, spurted at Pennsylvania in 1845 by a man called Drexen. He had found oil there, high-grade petroleum there. And then gradually these operations extended to Texas, California, Oklahoma.
So, plenty of oil was also available.
Electricity is a matter of, of course, invention; we talk about that later on. But electricity could be generated.
So apart from these four basic things there were harvest of silver, copper, gold in the territories called Arizona, in the territory called New Mexico, then California is famous for gold rush, that was there, then further the Nevada, Montana, these areas also had copper reserves, the famous Anaconda mines giving, giving copper. They had plenty of other minerals. The mineral bauxite which gave aluminum, bauxite was available.
Because of these things there were many people who overnight became very rich; they were originally farmers. They had dug out the mines. They had discovered and dug out the mines. Once they had dug out the mines they sold the raw materials cheaply to the future industrial tycoons. They made plenty of cheap money. Some of them were called copper king, some were called gold king, some of them ironmonger; in this way they became very rich. That was the source of capital.Now so much was the deposit of all these ingredients of industrial revolution that now they would require inventions because these deposits had to be converted into industrial goods, manufactured goods. For that inventive genius of America was called for. So we have to pass onto the inventions after this.
4. Inventions
The major invention before the civil war Cotton jean, Elijah Whitney, Steamboat, Robert Fulton, Railroads, railroad, Richard Trevithick, George Stephenson and Robert Stephenson, Santa Ferial railroad, western union railroad, Robert Fogel,Samuel Finley Breeze Morse, telegraph, Charles Brush, dynamo, Sholes and Glidden, typewriter, Mark Twain, Thomas Alva Edison, Graham Bells,telephones, rise of standard of living, Federal Patent office.
Now, of the inventions cotton jean by Elijah Whitney, steamboat by Robert Fulton, which were all done before the civil war.
After the civil war the great invention lay on the great railroads. The first person to use high-pressure steam to power a vehicle was Richard Trevithick in 1801, but the first engineers to usher in the railway era were a father and son, George Stephenson and Robert Stephenson. We have the Santa Ferial railroad, western union railroadconnecting north with south.
Because of the invention of Railroads there was enormous connectivity in United States, which Robert Fogel has described as railway revolution itself.
Then Samuel Finley Breeze Morse,who invented telegraph roughly during the Mexican War 1845-46. That gave another connectivity; not only within United States but also across the Atlantic with the Old World, the European continent.
Then we have Charles Brush, who was the first to invent dynamo, which generated electricity, in a small scale.
And then we had such persons like Sholes and Glidden who invented the typewriter and Mark Twain is amused that within a short time whole bundle of letters were being composed on paper through this machine.
And on and on, we have the famous man called Thomas Alva Edison.Edison not only generated electricity through dynamo, he had taken a patenton generation of electricity and most of the New York City was electrified because of the new techniques of Thomas Alva Edison.
Then we must not forget Graham Bells. He invented the telephones which gave another kind of connectivity.
With more connectivity industries thrive, standard of living rises and people’s life becomes very comfortable.
5. Rise of the Titans
The fruits of industrialization at this stage were reaped by few very enterprising capitalist of industries. One such titan was Steel king Andrew Carnegie.
Andrew Carnegie's life was a true "rags to riches" story. Born to a poor Scottish family that immigrated to the United States, Carnegie became a powerful businessman and a leading force in the American steel industry.
He introduced the Bessemer steel making process to America and, in 1875, opened his largest steel plant, the Edgar Thompson Works, in Braddock, Pennsylvania.
Today, he is remembered as an industrialist, millionaire, and philanthropist. A shrewd and equally competent contemporary of Carnegie was John de Rockefeller.
Rockefeller was aGerman Descent, Born in 1839 at Richford, New York, educated in the public schools of Cleveland, Ohio.
He became a bookkeeper in Cleveland at the age of 16. In 1862 he went into business with Samuel Andrews, the inventor of an inexpensive process for the refinement of crude petroleum. After rapid expansion, the firm was superseded in 1870 by the Standard Oil Company, organized by Rockefeller, his brother William, and several associates.
In early 1872 Rockefeller helped form the South Improvement Company, an association of the largest oil refiners in Cleveland, to get substantial rebates on railway shipments but the same arrangement was cancelled in three months, after popular protest.
But most of Rockefeller's competitors in Cleveland had already been forced to sell out to his combine and by 1878 Rockefeller had control of 90 per cent of the oil refineries in the United States and soon afterwards a virtual monopoly of the marketing facilities.At its peak sometime in 1916, Rockefeller's personal fortune was estimated at almost $1 billion and he became the billionaire. Then there was Henry Ford another great guy who had established a great corporation taking advantage of the invention.
Henry Ford (July 30, 1863 – April 7, 1947)
Henry Ford was the American founder of the Ford Motor Company and father of modern assembly lines used in mass production.
His introduction of the Model T automobile revolutionized transportation and the American industry.
He was a prolific inventor and was awarded 161 U.S. patents. Though better known for his contributions to industry, his obscure views as an anti-Semite and publications under his name continue to stain his achievements as an innovator. As owner of the Ford Motor Company he became one of the richest and best-known people in the world.
Guggenheim, Daniel (1856-1930)
Then copper KingGuggenheim, Daniel (1856-1930), American industrialist, who produced copper in the Anaconda mines. Copper was essential for industry particularly for flourishing electrical industries.
As a member of the firm of Guggenheim Brothers he became a leading figure in the copper industry of the United States and extended the activities of the firm to include gold mines in Alaska, rubber plantations in Africa, tin mines in Bolivia, and nitrate deposits in Chile.
He negotiated the merger of Guggenheim Brothers with the American Smelting and Refining Company and was president and chairman of the board of directors of the American Smelting and Refining Co. from 1901 to 1919.
6. Railroad Magnates
Then there were railroad magnates like Hill, Harriman, Gould and Morgan. They were the titans of the age who pooled the resources provided by the industrial revolution and laid the foundation of big businesses in America.
It is apt to call it big business because of the amount of capital they had as recounted by Professor Palit....
Morgan for example, the father Jupiter, he started conglomerating various industries, rail industries, many industries, and he is also banker. So, he established a money trust. So banking, speculating, you know what you called share, car trade, all these things he cornered. He actually became the owner of 124 companies. This is called formation of monopoly and trusts. In this process he rooted all the indigenous, small home companies. So he became the owner of 124, Morgan Trust companies and the total capitalization was 7 billion dollars.
Like Standard Oil’s Rockefeller. He also rooted all the small companies around him and ultimately established a huge organization; his capital was also over 10 billion dollar.
Something like Carnegie’s Steel Corporation, it also went into several billions, reached 13-14 billion.
So there were so many trusts and monopolies were created which actually gives you big business house in United States.
7. Conclusion
Student asked
Sir, the industrial revolution, what was its aftermath?
Dr. Chittabrata Palit replied
I would first of all say that the United States became one of the richest nations in the world. It really utilized its natural resources, standard of living went up and up in United States. These are all good sides.
And the bad side is only few people monopolized the benefits of industrial revolution. So there was once again birth of two classes in American society one as Cooper, famous philanthropist, used to say, they produced on the one hand, plutocrats, men of wealth, on the other side paupers. So plutocrats and paupers were created; that is United States became a very polarized society.Some people were stinking rich, the have’s and some people were poor people in United States, not so poor as in India, or in any other countries, but they were poor.
Michael Harrington had written two books. One was “American Poverty”, another book was “The Other Side of America”, where he described the poverty of the American people. So here is an industrial revolution which generates plenty as well as poverty, both, a bi-polar situation had been created due to industrial revolution.
And if some industries go on making profit, after profit, by depriving the common worker there would ultimately be political activity, and ultimately there would be recession, you are now hearing of meltdown, in recession, it is all due to the selfishness of the capitalists. If you exploit labor, exploit natural resources utmostand go on multiplying goods a time would come when there will be a recession.United States also faced that kind of recession, that kind of meltdown at one point. So that was the result of the excesses of industrial revolution.
So that is the consequence, aftermath of the industrial revolution. Anyway, when we close down on the topic here we see this is the period when they are basking in wealth, producing industrial goods and selling it all over the world. That was the situation in nineteenth century. So that produced so much but a time had to come when they would recoil, and that would lead to what we know as labor movement, trade union movements. But today we close here on this particular theme, the rise of industrialization, growth of capitalism, and rise of big business. Thank you.